Boeing Company (BA, Financial) has announced a 10% reduction in its workforce as part of its strategy to tackle ongoing financial challenges. This move involves laying off approximately 17,000 employees globally, including executives, managers, and staff. The decision was communicated by Boeing's President and CEO, Kelly Ortberg, in a memo to employees.
The company is also making significant adjustments to its business operations. Delivery of the new 777X wide-body aircraft is delayed until 2026 due to development challenges and production pauses. This marks a six-year delay from the original 2020 launch date. Additionally, Boeing will cease production of the 767 freighter in 2027 after completing existing orders, while continuing the KC-46A aerial refueling tanker production.
In its Defense, Space & Security division, Boeing expects substantial losses this quarter due to fixed-price development project challenges and commercial derivative production halts. Ortberg stressed the importance of restructuring and focusing resources on critical business areas amidst these difficulties. The ongoing strikes involving 33,000 West Coast employees have further impacted production, necessitating significant layoffs.
Preliminary third-quarter results reveal Boeing anticipated revenues of $17.8 billion, falling short of expectations, with an expected per-share loss of $9.97 and a cash outflow of $1.3 billion. Cash and marketable securities at the quarter's end totaled $10.5 billion. The commercial airplanes division is projected to generate $7.4 billion in revenue with a -54% operating margin, while the Defense, Space & Security segment anticipates $5.5 billion in revenue with a -43.1% margin.
For the first half of the year, Boeing faced revenue challenges, reporting $33.435 billion, an 11% year-over-year decrease. The net loss for the period reached $1.794 billion, over twice as large as the previous year. The company attributes these losses mainly to reduced commercial aircraft deliveries and defense project setbacks.
Boeing's restructuring efforts under Ortberg, who joined as CEO in August, are expected to realign the company amid continued losses, regulatory scrutiny, and supply chain issues. Investors and the aviation industry are closely monitoring Boeing’s strategy to overcome these challenges and regain stability post-safety crises.
